Tuesday, February 16, 2010
Call me naïve or not in touch with reality (though I really hope you won’t call me that), I thought I was imagining things. I was researching some materials for an academic report when a study caught my eye. It’s all about the authors’ investigation on the concept of URT in auditing.
Okay, this is for the benefit of those who don’t know, URT stands for under reporting of time. Why did I think I was imagining things? Because, although it exists, URT is not something usually discussed outside the auditing firms. And before you get on my case and say this - not usually discussing it in public – is not true, the same study quoted an audit partner saying precisely the same thing!
Personally, I’ve seen this happen. When I was a junior, we were always told to log in our ‘productive hours’. Take note, productive hours, NOT actual hours.
Productive hours? What the heck does that mean? Do these hours include our learning curve (we’re juniors, remember)? Do they include the time when we had to go for a water break or just take a five – minute break? Do they include the travel time or the time we get stuck in traffic? Do they include the time we used up waiting for the client to finish his phone conversation so that we can start asking our questions?
Believe me, I spent 8 years in an auditing firm, and never once did I get the concept of ‘productive hours’.
When I became a senior then a manager, I couldn’t care less about productive hours and audit budgetary constraints. Sure, I prepared audit budgets and budgeted auditing hours, in short I played lip service to the concept of budgets and budgeted hours. But I never followed them.
Why? Because the reality is I know my clients and I know that our audit fees will not be enough to cover our actual hours. And which will I choose? Stick within the audit fee and curtail the hours by either reducing them or reducing the audit work? Or do the audit work required and to hell with those budgets? Easy choice. Fortunately, my partners never called me on it; I guessed they’re in touch with the reality as well.
But based on what I read, it would seem that URT is really a worldwide phenomenon (the study was done in
) as far as audit is concerned. And the study gave off various reasons as well (and I thought it was only because we were unproductive). Let me just list them here: Ireland
Why am I not surprised that this is the first in the list? Inefficiencies can be due to a lot of factors (according to the study). It can be due to doing activities that are not related to work (Farmville, anyone?). Or maybe one spent a half hour chatting over the phone with a friend. Or you feel that you are inefficient because you are a slow learner or you are still in the bottom part of the learning curve (as a junior or a new senior or new manager, you would sometimes feel this way). Or you made a lot of mistakes and you have to do everything all over again. Whatever the reasons are, these things boil down to one thing – you have to be 100% productive during the day or else…you’re inefficient! (I guess we’re not allowed to be human beings when we’re inside an auditing firm.)
Performance Evaluation System
Uhm, I never saw this as part of my evaluation (though if I did, I would have ignored it), but evidently, this was one of the reasons given for the URT. You want to be noticed, you want to be promoted quickly, you want to reach the top in your rating system so what do you do? Stop charging so you can meet the budget! (Ugh, not good, not good at all.)
This is how the juniors (and sometimes, the seniors) learn about URT. They are ‘requested’ (explicitly or implicitly) either not to charge all their hours in a particular job or charge it in another job. And being the dutiful juniors and seniors that they are, they complied.
So those are the three reasons given. How about you, do you practice URT?